Julian Kossoff is a senior editor for Telegraph.co.uk. He is an award-winning journalist who has written extensively on race and religion.

The most significant act of terrorism ever committed in Israel was the murder of one Jew by another.

In 1995, Israel's Prime Minister Yitzhak Rabin was assassinated by Yigal Amir, a fellow-traveller of the Jewish settler zealots.

Rabin was a pragmatist and an idealist, a general who became a peacemaker, and the only Israeli leader in living memory whose force of personality could have made the two-state solution happen. The current PM Binyamin Netanyahu was, at the time, a leading Right-wing opposition politician, who had so stoked the rejectionist rabble in the run up to Rabin's slaying at a peace rally in Tel Aviv, that Rabin's wife openly snubbed him at the state funeral.

Ironically, Netanyahu will soon find him the cross-hairs of the Settlers divinely-inspired rage if he agrees to (and actually implements) a construction freeze on Jewish West Bank.

President Obama cannily identified the settlers as the pressure point to start his tough-love programme for Israel. Outside hardline Zionist circles they are pretty much indefensible. Even ordinary Israelis find their holier-than-thou stance a pain and army conscripts complain bitterly about being sent to guard the provocative fanatics.

Well done to the new president's administration for getting some traction on the Middle East situation. With world opinion giving further momentum, Netanyahu is without doubt feeling the pressure.

But as the T-shirt in the Jerusalem souk says: fighting for peace is like ****ing for virginity, and Obama is embarking on a Sisyphean endeavour which has rolled over many other notables (most notably his Democrat predecessor Bill Clinton) with big shoulders. The window for the two-state solution may have already slammed shut and even all the leverage a US President can bring to bear won't prise it open.

Few have any faith left in an agreement being finessed from on high; it is in the hearts and the minds of millions of Israelis and Palestinian Arabs where the solution really lies.

Both psyches are deformed by mutual hatred, poisoned by religious bigotry and hardline nationalism. Both tribes have been utterly brutalised by over 60 years of war. But Israel can and should take the lead in breaking down the great mental wall, with what you might call the 'Barenboim solution'.

As the more powerful economically and military player, she has the capability and responsibility to act in a more ethical and empathetic fashion towards the Palestinians.

Netanyahu's election platform talked about the economic development of Palestinian areas. Let's see it – let him put some shekels where his mouth is. Israeli businesses should get on board too and promote Palestinian prosperity.

His government has started removing some of the network of Israeli Army checkpoints throttling the life out of the West Bank. Increase the pace of this initiative and any other measure which would relieve some of the misery endured by millions living under the Occupation.

Stop hooligan settlers intimidating Palestinian farmers. Ease the blockade of Gaza. Accept and embrace the fact that Jerusalem has an important Arabic and Muslim heritage (Please add your own suggestion for confidence building below)

None of these changes would threaten the way of life of Israelis, no maps would need to be redrawn, no settlements dismantled, but they would transform rapidly the lives of Palestinians and would create a new horizon on which to project renewed hope of an enduring and enlightened peace.